Currency spat, protectionism makes no winner

08:04, December 01, 2009      

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As trade interdependence between China and the European Union has been so entrenched as it is today, the two sides should abandon currency spat and protectionism, the twin perils which could hurl both to the abyss of failure.

At the 12th China-EU Summit held in the east China city of Nanjing Monday, Chinese Premier Wen Jiabao said "Some are pressing for a stronger yuan, while also practicing protectionism against China. It is unfair and is in fact containing China's development."

Wen's rare bristly tone came as China had come under renewed pressure from developed economies who urged yuan's appreciation and launched various protectionist measures against imports from China .

The almost unanimous chorus by developed economies could not deny the simple fact that exchange rate has never been fundamental in the bilateral trade. In stead, comparative advantages and open markets are key to the success of commerce.

Countries that overrate yuan's role should fully assess their own responsibilities and faults in the trade disputes, notably, the issuers of major reserve currencies.

As Premier Wen put it at the summit, maintaining a stable yuan during the global financial crisis not only benefits China's economic development, but also conduces to world economic recovery.

Now the global economy has just seen the twilight of recovery, the priority is to buttress the up tick trend, other than wielding the stick of protectionism. The short-sightedness will only bring new troubles to all.

In the past 35 years, China-EU trade has ballooned as the trade value topped 425.58 billion U.S. dollars last year, an increase of19.5 percent from a year ago.

That was also 9 percentage points and 6.5 percentage points higher than those with United States and Japan.

Although the financial crisis is expected to trim bilateral trade by some extent this year, EU's leading status in China's foreign trade remains intact.

Premier Wen has pointed out the depth and width of Sino-EU trade relations has gone far beyond customs figures. The two sides should take a more strategic and comprehensive perspective toward the current situation and aim for the future.

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